Episode Six has launched Verified Backing, enabling banks to issue stablecoins and tokenized deposits with real-time verification before token creation and before redemption loans are issued.
The company stated:
- Verified Backing will verify the recorded backing at issuance and confirm that the tokens are still in circulation before redemption.
- Episode Six states that these checks run on the Token Control Ledger on the issuing bank's side.
- This feature covers supported tokens issued through this ledger, including stablecoins and tokenized deposits.
- The company stated that Verified Backing has been made available to customers in its operating markets.
In its October 15 announcement, Episode Six stated that Verified Backing will compare tokens against the backing records recorded in its E6 Token Control Ledger. Upon redemption, the system will verify whether the token is genuine, still in circulation, and has a corresponding backing record before the bank releases funds.
The company, headquartered in Austin, Texas, stated that the feature covers proprietary supported tokens issued by banks through this ledger. The announcement lists both stablecoins and tokenized deposits as products covered by this check.
Stablecoin collateral checks run before issuance and payment.
Before tokens are created at the bank, Episode Six says Verified Backing will verify whether the backing is available. When holders later present their tokens to redeem, this feature checks their status against the ledger records.
According to the company’s description, the redemption check applies regardless of how many wallets or blockchain networks the token passes through. Episode Six states that this process runs within the bank’s internal ledger, where institutions record and manage their tokenized funds.
The company positions this feature as a way to reduce losses that may occur during token redemption. Its announcement emphasizes whether the token remains a valid, outstanding obligation at the time of redemption, rather than solely its status at the time of initial issuance.
Daryn Griggs, General Manager of Asia Pacific at Episode Six, said: “For risk and compliance teams, the hardest question about tokenized assets is not whether the token was genuine at creation, but whether it remains genuine at redemption.”
Griggs said this check helps banks confirm that the redeemed tokens are "still in circulation and have endorsement records."
When distinguishing this process from traditional reconciliation, Episode Six explains that reconciliation involves checking bank positions after transactions occur, whereas Verified Backing runs at the time of issuance and redemption, placing the verification at the point where the bank creates tokens or pays out against tokens.
Episode Six places verification within the issuing bank's ledger.
To explain its approach, Episode Six compares Verified Backing to the transition from magnetic stripe cards to EMV chip and PIN payments. The company describes this analogy as a shift from static information to verification conducted at the time of the transaction.
For tokenized funds, the company stated that its ledger provides the records upon which issuance and redemption requests are based. Therefore, this new feature is situated within the infrastructure used by the bank to issue and manage its own tokens.
Episode Six CEO and co-founder John Mitchell described Verified Backing as an additional feature of the existing Token Control Ledger.
Mitchell said, "Tokenized funds will account for an increasingly larger share of banking operations, and trust in the actual underlying assets must expand in tandem."
According to him, this ledger allows banks to manage tokenized funds within their own operational models while enabling real-time verification of supported tokens.
According to the announcement, Verified Backing is now available to Episode Six customers worldwide, covering all markets where the company operates. The provider states that its card issuance and ledger infrastructure serves fintech companies, banks, and brands in over 50 countries.
Bank of America is advancing both deposit and stablecoin initiatives simultaneously.
Among U.S. lending institutions, Wells Fargo has disclosed its initiatives in tokenized deposits and stablecoins. According to crypto.news on October 13, CEO Charlie Scharf stated that the bank launched tokenized deposits for business and commercial clients in September.
During the earnings call, Scharf listed corporate transfers as a use case and stated that, after expansion, customers will be able to transfer funds between accounts and across borders at any time.
The same report noted that Wells Fargo, along with 20 other financial institutions, is participating in a proposed stablecoin company. According to the consortium’s announcement, its first product will be a U.S. dollar-backed token, planned for launch in the first half of 2027.
For U.S. stablecoin issuers, reserve assets and redemptions are also part of the federal rulemaking process. The Office of the Comptroller of the Currency has proposed regulations under the GENIUS Act covering these functions, along with risk management, custody, auditing, reporting, and oversight.
OCC states that its proposal applies to specific banks and non-bank issuers under its jurisdiction, including subsidiaries of national banks and federal savings associations.
Banks remain responsible for compliance when using external service providers.
In a September 10 article about Cosmos’s network of 17 companies, Chief Business Officer Eran Barak described how banks allocate tokenization work among infrastructure providers.
Barak stated that the services offered by the company include custody, wallet control, transaction screening, security, and connectivity with banking systems. Banks select service providers and enter into individual agreements, but compliance decisions and regulatory responsibilities remain with the financial institutions.
Additionally, according to reports on September 22, Canada's six largest banks have begun exploring a shared tokenized deposit system.
In a joint announcement, Bank of Montreal, CIBC, National Bank of Canada, Royal Bank of Canada, TD Bank, and Scotiabank stated that the first phase will examine the transfer of CAD-tokenized deposits among participating financial institutions. The banks added that other institutions may join as the project progresses.